NEGOTIATOR’S TAKE: Sharp fall in Chinese metals likely means lower prices globally.


May 2016 – Shanghai – Commodity slide spills over into stocks

Chinese commodities prices spiraled lower on Friday, with steel futures suffering their worst week since 2009, as more money flowed out of markets whose surge two weeks ago unnerved global investors and forced regulators to step in to restore calm.


Indicating how authorities may now be alarmed after a collapse in volumes and prices, the Dalian Commodity Exchange on Friday said it will cut some trading fees on contracts such as iron ore and coking coal.  The commodities slide spilled over into stocks, with the Shanghai Composite Index ending down 2.8 percent, its worst day since February, as commodity producers fell.  Commodities linked to China’s steel sector, which led the mid-April rally, were the hardest hit on Friday, on worries that demand in the world’s biggest steel consumer could soon wane. The selloff spread to agricultural products including soybeans, eggs and cotton.


Prices pulled below mid-April levels

Some traders were concerned that China’s interest rate easing cycle could be over even as optimism about prospects for the world’s No.2 economy faded.  The retreat pulled prices of many of the commodities below levels in mid-April, when a buying frenzy, pinned on retail investors, bloated volumes and drew comparison with the boom-and-bust cycle in China’s stock markets last year.

“It’s panic now and capital is flowing out of commodities markets amid a cautious outlook on the economy,” said a trader at a fund in Shanghai. . . . Read the rest of this ProPurchaser sourced article, HERE.


SOURCE: Hellenic Shipping News Worldwide | Reuters


EDITOR: Ed Davies


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